3.0 HRSR 12-07-2015 - Laserfiche WebLink

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RELEVANT LINKS: See Part II-B-3 Liability Cities should carefully consider liability elements when leasing land and issues. buildings from or to another entity. These issues are discussed in more detail in a later section of this memo. H. Lease-purchase agreements Minn.Stat.§465.71. All cities have the power to use a lease-purchase agreement to lease real property with an option to buy. With a lease-purchase agreement,the title is retained by the seller or assigned to a third party as security for the purchase price. Minn.Stat.§465.71. If the amount of the contract is less than$1 million,this obligation is neither included in the calculation of net debt for the purpose of the bond laws nor shall it constitute debt under any other statute. Minn.Stat.§465.71.also Although a city is not required to use competitive bidding to enter into the see Part III-F-Competitive bidding and Part II-B— lease-purchase agreement, if it does so the amount of the contract must Leases• include the total of all the lease payments for the entire term of the lease. A city must have the right to terminate the lease purchase agreement at the end of any fiscal year during its term. Although not specifically required by statute, cities should include a non- appropriation clause in the contract. Such a clause allows a city to terminate the lease-purchase agreement if the council does not appropriate sufficient money to make the required payments. This ability may be important because if a city is required to make lease payments without regard to an annual(or biannual)appropriation, the lease might appear to be a debt of a city and it could be required to meet the statutory requirements for debt instruments. A city should consult with its attorney before entering into any lease- purchase agreement to ensure that all of the city's concerns have been addressed. I. Contracts for deed Minn.Stat.§412.221,sued. Statutory cities may purchase real property under a contract for deed. The 2. payments must be payable over a period not to exceed five years. Under the contract,the seller must be limited to the remedy of the recovery of the property in the case of nonpayment of all or part of the purchase price. Minn.Stat.§412.221,sung. If the purchase price of a contract for deed exceeds 0.24177 percent of the 2. estimated market value of the city,the city must do ALL of the following in order to purchase the land using a contract for deed: • Publish a resolution. The city must publish a council resolution in its official paper. The resolution must indicate that the city intends to purchase the property using a contract for deed. League of Minnesota Cities Information Memo: 1/22/2015 Purchase and Sale of Real Property Page 9